Recent Developments

Italy—A recent decree by the Italian Council of Ministers would—if enacted in its current form by the Italian Parliament—establish provisions governing non-possessory pledges of certain assets, permit extrajudicial appropriation of real estate assets used to secure financing and raise efficiency levels for insolvency proceedings. During the last two years, the Italian government has focused on reforming the Italian lending market, with the aim of boosting access to financing for Italian businesses and improving bankruptcy and enforcement proceedings in Italy. As part of this reform process, the Italian Council of Ministers enacted Decree No. 59 of 3 May 2016 ("Decree"). The Decree introduces measures designed to, among other things: (i) create a new form of security—a "non-possessory pledge" or floating charge; (ii) establish the "patto marciano" agreement, which permits extrajudicial foreclosure on real property collateral; and (iii) expedite and improve the efficiency of enforcement and insolvency proceedings. A more detailed discussion of the Decree is available here.

Europe—Recent months have seen a surge of new initiatives by European antitrust enforcers applying competition law rules to holders and processors of "big data." Big data often is described as the accumulation of a significant volume of different types of data, produced at high speed from multiple sources, whose handling and analysis might require new and more powerful processors and algorithms. Although public attention has so far mostly focused on search engines and social networks, many other industries, such as online advertising, energy, telecommunications, insurance, banking or transport process big data and are thus potentially affected. A more detailed discussion of these developments is available here.

The UK, the US and Canada—On 3 May 2016, the Ontario Court of Appeal issued a ruling denying a request by various parties in the cross-border bankruptcy cases of defunct telecommunications giant Nortel Networks Inc. and its affiliates ("Nortel") to appeal Justice Frank Newbould's 12 May 2015 decision applying a pro-rata allocation to the more than US$7 billion in lockbox funds escrowed after Nortel's "Rockstar" sale in 2010. The motion for leave to appeal was spearheaded by the debtors in Nortel's US chapter 11 cases, which are pending in the US Bankruptcy Court for the District of Delaware. In its opinion, the Ontario Court acknowledged the "unique and exceptional" nature of the case but concluded that "granting leave [to appeal] would not provide an opportunity for this court to provide guidance on legal issues of significance to the practice". The court "accept[ed] that the allocation of the Lockbox Funds is a significant issue in this [Canadian bankruptcy] proceeding" but concluded that "standing alone, this factor is insufficient to warrant granting leave to appeal". As to whether an appeal would lead to significant progress in the litigation, the court noted that various courts have implored the parties to settle their differences, and a "further appeal proceeding in Canada would achieve nothing but more delay, greater expense, and an erosion of creditor recoveries". The bulk of the ruling addresses whether the appeal is meritorious or frivolous. Ultimately, the Ontario court rejected each of the three arguments made by the prospective appellants: "substantive consolidation, the interpretation of the [transfer pricing agreement among various Nortel entities] and questions of fairness".

On 17 May 2016, the US District Court for the District of Delaware certified a direct appeal of the US Bankruptcy Court's 12 May 2015 allocation decision to the US Court of Appeals for the Third Circuit. See Nortel Networks Inc. v. Ernst & Young Inc. (In re Nortel Networks Inc.), 2016 BL 156543, 5 (D. Del. May 17, 2016). In its ruling, the district court, among other things, expressed concern regarding the pensioners affected by the delays, stating that "the Court cannot escape the conclusion that these matters of public importance may be materially advanced by certification of direct appeal". The Third Circuit may or may not agree to hear the direct appeal.

Global—On 19 April 2016, after a 15-year absence, the Republic of Argentina returned to the global debt markets, when it sold US$16 billion in bonds to fund a series of landmark settlements reached earlier this year with holdout bondholders from the South American nation's 2005 and 2010 debt restructurings. This latest development in the more than decade-long battle between Argentina and the holdouts—led by hedge funds Aurelius Capital Master Ltd. and NML Capital Ltd.—may provide an unlikely, albeit welcome, denouement to a story that has long captivated the international community. A more detailed description of Argentina's sovereign debt saga, which involved three sovereign debt defaults over a span of 15 years, is available here.